Gary Cohn, former Goldman Sachs executive and top economic adviser to president Trump, is leading the search for a new Fed chief to replace Janet Yellen. But guess what, he seems the most likely to fill the role. Putting oneself forward in a search role is not foreign in Washington—that is how Dick Cheney got his position as vice president under George W Bush. Speculation about the next Fed boss has grown as Yellen has not made her intentions clear and Trump has long been an opponent of her tenure. If Cohn were to take her place he would be the first Fed leader in decades that did not have an extensive economics background.
FINSUM: We think this would be a perfect fit for Cohn. Given the turmoil at the White House and the fact that he seems to be at odds with Trump on some issues, it might be a very good role for him to be the leader of the Fed.
The Republican push for a healthcare overhaul to replace Obamacare has not been doing very well. Senate leader McConnell has delayed the summer recess to try to get it through, but so far it looks like Republicans just don’t have enough votes. As a response, the party is set to unveil a new plan that will hopefully attract more lawmakers to support it. However, early comments on the new plan (which is due out today), don’t seem favorable.
FINSUM: The big trouble for McConnell, who is publicly under pressure from Trump, is that some of the non-supporting Republicans think the measure goes too far, while others think it does not go far enough. Hard to make a deal in that situation.
Speaking to Congress yesterday, Fed chief Janet Yellen spooked the markets with some unexpected comments. While many thought she would walk the up-until-now Fed line of a healthy economy and quarterly rate rises, she broke from that mold and delivered a dovish speech no one seemed to expect. In particular, she expressed worries about low inflation, using a deliberate change of wording that signaled to markets that something had changed. “When the Fed makes a deliberate change in its phraseology, it clearly matters … It shows the Fed is getting a little less prepared to give inflation the benefit of the doubt”, said the chef economist at Wrightson Icap.
FINSUM: So perhaps the Fed is not so sure inflation will keep rising. This definitely draws into question the forecasted rate rises for the rest of the year.